~ An Aussie look at Financial markets-Been in the Biz for over 30 years!

Wednesday 24th August – Australian Market Wrap

ASX 200 rose slightly as we watch and wait. 8 points up today to 5562 in another tight range day with huge volatility on company results. Banks continue to be the best sector coupled with materials. Asian markets mixed with Japan up 0.55% and China down 0.13%. AUD 76c and US futures down 14.

STOCKSANDSECTORS

Banks continue to be back in favour on a yield and valuation basis. Westpac Bank (WBC) +1.12% the best of the bunch but wealth managers also pushed ahead MacquarieGroup (MQG) +0.44% have quietly moved back above $80.Insurers also saw some bargain hunting emerge with QBEInsurance (QBE) +0.90% and NIBHoldings (NHF) +2.93%.

Industrials mixed with some emperor stocks like Aconex (ACX) -6.30% downgraded following the numbers yesterday. Nearmap (NEA) -14.29% also slid after the numbers today.

Healthcare was mixed with good results from Sirtex (SRX) +11.97% and LifehealthcareGroup (LHC) +14.21% also doing very well following the results yesterday. iSentia (ISD) +16.72% also proved the market wrong with better than expected numbers after a poor 2016 performance.

Speculative stock of the day: AbmResources (ABU) +26.98% following the appointment of Matt Briggs as MD.

CORPORATENEWS

Wesfarmers (WES) -2.18% reported an 83.3% fall in profits to $407m as asset write-downs in Target and the coal business offset good results in Bunnings and Kmart. Taking off the write-downs net profits fell 7.7% to $2.25bn a little below forecasts of $2.29bn.

QANTAS (QAN) +1.47% Record profit of $1.029bn. Share buyback of 500m and a dividend announced for the first time since 2008

WorleyParsons (WOR) +2.65% back to profit for the full year, with a net profit after tax of $23.5m from a loss of $54.9m a year ago. Revenue fell 1% to $7.79bn and underlying NPAT dropped 37% to $153.1 m. Conditions remain “Challenging”.

Blackmores (BKL) -19.49% hit a hiccup today despite making $100m in profits up 115% with a soft outlook statement due to domestic issues with re-stocking. Another Emperor stock it seems with questionable garb.

SteadfastGroup (SDF) -1.84% Steadfast Group, the largest network of general insurance brokers and advisers in Australia, has shown a 75% jump in full year profit to $73.5 m and flagged a profit of up to $90 m this financial year.

PactGroup (PGH) +1.72% announced a net profit of $85.1m for the 2016 financial year, up from 25.8% from 2015. Final dividend of 11c per share.

ArdentLeisure (AAD) +14.00% had a great day with results showing an increase in profits by 32% to $42.4m. With the sale of its health clubs recently and a greater focus on the US Main Event business the market was impressed with the outlook.

APAGroup (APA) +0.43% a 68% fall in profits to $179.5m with a final dividend of 22.5c slightly below estimates. Outlook is for a 43.5c dividend next year.

WiseTechGlobal (WTC) +3.00% grew revenue by 47% to $102.8m. However, profits took a hit this financial year, as forecast in its prospectus, thanks to listing costs and other significant items equating to $17.3 m, causing its net profit to fall 78% to $2.2 m.

Great result today from ClearviewWealth (CVW) unchanged despite profit soaring 89% to $23.6m. Core life insurance profits rose 60% to $24.5m and the company raised its final dividend to 2.5c fully franked.

Qube (QUB) -0.75% reported a 3% fall in profits to $92.5m. Qube’s revenues and earnings were lower than some analysts’ forecasts, with revenues dropping 9 % to $1.3 bn.

HansenTechnologies (HSN)-5.11% reported a profit up 54.4% to $26.1m and a 4c dividend. Not enough it seems.

MurrayGoulburn (MGC) -0.78% reported profit rose 61.2% to $40.6m after a horror year for farmers but it seems not for directors who have seen their pay increase.

An appropriate name TheRejectShop (TRS) -18.25% despite lifting the bottom line by 20.1% the results fell short of forecasts and the stock was put into the bargain bin. One issue was the like for like sales growth slowing to 1.3% in the June-half after growing 4.4%in the December-half. The stock has been a big winner this year. Until today.

LinkAdministration (LNK) -0.12% statutory net profit after tax of $42.5m, beating the guidance given in its listing prospectus for $27.5m by 54.5%.

A2Milk (A2M) -6.39% reported a net profit of $NZ30.44m ($29.3mm from a loss of $NZ2.09 million a year earlier. Revenue more than doubled to $NZ352.78m from the year-earlier $NZ155.11m, the company said in a statement to the ASX. No dividend though.

Metcash (MTS) has bought the Home Timber and Hardware Business from Woolworths for $165m with the funds to be raised through a placement to raise $80m and a SPP for $20m and the remainder in debt.

Slater and Gordon (SGH) -10.43% gave an update before the numbers next week. The company said its second half net loss after tax was expected to be $59.3m, which compares to a first half loss of $958.3m. Full-year loss would be just over $1 billion with the CEO particularly pleased with the second half turnaround. That is of course having written off a billion dollars on the UK acquisition. Must be in line for a pay rise.

Evolution Mining (EVN) will pay Glencore $880 million in a deal to take an economic interest in the Ernest Henry copper and gold mine in Queensland. Evolution will take all future gold production and 30 per cent of future copper and silver production from the Glencore-owned mine, and pay 30 per cent of future production costs. The company is in a trading halt as it nails down its $401m capital raising coupled with a $500m five-year loan.

McGrathRealEstate (MEA) +5.80% John McGrath has stepped down as joint CEO. He will remain as an ED in charge of strategy.

ECONOMIC NEWS

The total value of construction work completed in Australia fell 3.7% in the second quarter from the first quarter to A$47.42bn according to the ABS.

The value of building work completed rose 1.2% to A$25.96bnin the quarter from the previous three months. Residential building work rose 0.8% to A$17.02bn in the second quarter.

EUROPE AND THE US

Glencore Plc, reported a 66% drop in first-half profit on lower raw-materials prices.Net income excluding some items fell to US$300m. Forecasts were for around US$318m. Wants to cut debt to as low as US$17bn

A member of Parliament to Disraeli: “Sir, you will either die on the gallows or of some unspeakable disease.”“That depends, Sir,” said Disraeli, “whether I embrace your policies or your mistress.”

“He had delusions of adequacy.” – Walter Kerr

“He has all the virtues I dislike and none of the vices I admire.” – Winston Churchill

“I have never killed a man, but I have read many obituaries with great pleasure.” Clarence Darrow

“He has never been known to use a word that might send a reader to the dictionary.” – William Faulkner (about Ernest Hemingway).

“Thank you for sending me a copy of your book; I’ll waste no time reading it.” – Moses Hadas

“I didn’t attend the funeral, but I sent a nice letter saying I approved of it.” – Mark Twain

“He has no enemies, but is intensely disliked by his friends..” – Oscar Wilde

“I am enclosing two tickets to the first night of my new play; bring a friend…. if you have one.” – George Bernard Shaw to Winston Churchill“Cannot possibly attend first night, will attend second…. if there is one.” – Winston Churchill, in response.